Wednesday, January 18, 2012

Side-by-Side: Absolutely Nothing To Do With The Bakken

These two stories were side-by-side in the Los Angeles Times today. First:
In Death Valley, California, some students have a two-hour round trip to school and back. They depend on public transportation (a yellow school bus). The folks in rural North Dakota can relate to this. Because of budget constraints, the state has pulled funding for school transportation for the rest of this fiscal year and may eliminate it entirely next year. For those students, the cut is 'catastrophic.'
Then, just below that story is this story:
Governor Jerry Brown presses on with his plans for a $100 billion bullet train in central California that will go nowhere, be ridden by nobody, and never reach bullet-train speeds. 

Business Opportunity in Miles City, Montana -- Southwest Gateway to the Bakken

Entrepreneurial opportunity in Miles City, Montana -- sent to me by a reader as a comment. I know nothing more than what is being printed here. 
Own property in Miles City in the VERY BEST spot........just beside I-94 interchange. Want to build a 50 unit economy motel............anyone reading this interested?
Please connect with me......Rob Shipley, Box #1512, Miles City, Montana
Note: Miles City is west of Baker, Montana, a huge center of oil, natural gas, and pipeline activity on the North Dakota/Montana state line.  Northeast, is Williston, the center of the Bakken.  And southwest of Miles City is Billings, MT. Miles City is about the midway point between Williston and Billings. Beautiful area.

Update On Predicting 2012 Dollar Value of Building Permits for Williston, North Dakota -- The Bakken


February 26, 2012: see first comment.  The 3 acres just north of Applebys -- I know the area very well; I walked it many times and have photos of trucks parking there some time ago, but have since been removed. So, another 60 units (I round numbers a lot on this site) in Williston which will go up pretty quickly. The landscape of Williston has changed beyond what anyone could have imagined, and it looks like the change continues. And I see fewer and fewer "bad news" / "woe is me" stories coming out of the oil patch. The infrastructure is catching up.

Original Post 
A few days ago I predicted that building permits in Williston will level off, come in under the record-setting $360 million for calendar year 2011.

Part I: A reader suggests that building permits for 2012 will, in fact, far exceed the $360 million, and has the data to support his/her contention. It came in as a comment, and knowing that not everyone reads the comments I have re-posted it here:
Your prediction of $200 million [in building permits for calendar year 2012 for Williston] is too low.

My bet is at least $425 million.

Granite Peaks Phase 1 (out of 3) in Harvest Hills: they have sold ALL but 5 residential lots so far. [While visiting Williston last autumn, I spent a lot of time in this area; it is incredible to think that all but five residential lots have been sol; absolutely incredible.

The other half of phase 1 are multi-housing lots (also all sold out).

Ground breaking will take place this spring for phase 2 and possibly for phase 3. These phases include another 1,000 building lots for single and multi-units, and includes a new middle school.

There is a link to a site that invites contractors to check out and bid on upcoming projects. Included are:
  • one new elementary school
  • one new middle school
  • addition to a current elementary school for an additional 500 students
  • renovation of an existing high school
  • four (4) national chain restaurants
  • one 200,000 sq ft national retail store (Menards?)
  • four (4) more motels/hotels
  • a 145-unit assisted living facility
  • and, more
A school alone would be over $100 million.

See link below. After clicking on the link, click on the drop box to choose 90+ days (not just 90 days); then type in Williston for city. Scroll over the right box and check North Dakota. You are searching for building projects for OVER the last 90 days for Williston, ND.

You cannot see the entire project without registering, but you get a brief description of the projects.
Something tells me my hunch of $200 million is way, way off. A huge "thank you" to the reader for taking time to send in such a detailed summary, as well as providing the link. I will post the link at "Data Links" page.

Part II:
Bakken Industrial park will be in full swing this spring as well. It is pretty evident they will sell out of their commercial lots with the new Love's truck center breaking ground this spring.

Also Sand Creek retail center will break ground this spring.

University Commons (600+ unit residential complex) has already begun scraping. This is south of 26th street behind the old Jorgenson's (now called 26th Street Liquor). That nearly 30-acre site will be housing. [I know the area area; I always appreciated the wine selection at Jorgenson's; quite incredible for Williston, and well before the boom.]

Another exciting project is a huge 4-level office complex out east of Williston built into a hillside by Stoney Creek Elementary School where the new Weatherford complex (similar to the Baker Hughes, Sanjel, Halliburton, and Schlumberger complexes) is going to be constructed. Weatherford is following the lead of the other large oil service companies in putting down permanent and serious roots in Williston. [That's incredible about Weatherford -- another huge oil service complex; absolutely amazing.]
Check out this site for a stand-alone office complex to be built by the owners of Red River Supply called Stoney Creek Offices link:

IEA Cuts Oil Demand Projections for 2012

Link here.
"Slowing oil demand growth has outpaced downgrades to economic forecasts," said the IEA in its monthly oil market report.

Oil demand in the fourth quarter surprised the IEA by falling 300,000 barrels a day on the same period the previous year. The IEA forecast last month slight growth in fourth quarter demand, but a combination of mild weather, economic weakness and high crude prices reduced consumption for the first time since the depths of the great recession in the third quarter of 2009.

The IEA slashed a further 500,000 barrels a day from its demand forecast for the first quarter of 2012, citing the same "growth-impeding" combination of economic woes in Europe and continued high prices due to the tensions between Iran and the West.

Oil demand growth for the whole of 2012 was cut by 200,000 barrels a day to 1.1 million barrels a day.
"IEA" is the international agency.

I have a devil of a time keeping the IEA and EIA straight.

And then, of course, there's EIEIO. But I think that has something to do with equal imployment equal incentive opportunities. Or a farm.

Old MacDonald Had a Farm, Unknown
That video, by the way, has almost 85 million "hits."

I wouldn't put a lot of stock into the latest IEA estimate; I think the IEA puts out a new estimate every month. I am not too excited about the latest estimate that says growth will slow from 1.3 million bbls per day to 1.1 million bbls per day -- that's still growth of more than a million bbls a day.

January 22: First Class Postage Up One Penny -- Buy Your "Forever" Stamps Before Sunday

Memo to self: buy a book of stamps for the rest of 2012.

Link here.

LA Port Sets Record -- Yes, Some Issues With Long Beach Port -- But Still -- Absolutely Nothing To Do With the Bakken

Link here to Carpe Diem.

The Port of San Pedro (aka the Port of Los Angeles) hit export container record for 2011.

There are some issues affecting the Port of Long Beach (right next to PoLA) but still.
"The Port of Los Angeles set a new standard for exports in 2011, becoming the first harbor in the nation to ship more than 2 million containers carrying U.S. goods to customers overseas, according to year-end statistics released by port officials.

The nation's busiest seaport moved 176,531 export containers in December, enough to kick up its 2011 total to 2.11 million containers. That broke the port's former record of 1.84 million export containers set in 2010.
Speaks volumes.

You Gotta Be Kidding -- I Did Not Know This -- It Must Have Been In the Small Print -- Absolutely Nothing To Do With The Bakken


One hour later: I'm still troubled by this. How does an electric vehicle fail to meet California emissions standards that would qualify it for state incentives? I was under the impression that electric vehicles had, like, no emissions.

Original Post
Link here.

The Chevy Volt did not meet/exceed California emissions standards which would have qualified it for state subsidies ....
General Motors Co. is revamping its Chevrolet Volt plug-in electric vehicle to meet California emissions requirements, aiming to juice sales after failing last year to qualify for state incentives that helped fuel the rise of Nissan Motor Co.'s rival Leaf.

Details, details.

In all of the hundreds of interviews and on-the-air discussions, Phil LeBeau, CNBC commentator, and GM spokesman, never mentioned that little bit of trivia.

And to think all those faux-environmentalists thought they were buying a state-of-the-art environmental automobile. Even Nissan had it figured out.

I wonder if they replaced the battery with a gasoline engine converted to run on natural gas ......

On another note, I happened to catch a video on the success of Apple and it had to do with the concept of thinking different(ly) - not so much the product, but the passion the product generated.

And I think that's part of the problem with the Volt -- to describe it as a "plug-in" isn't helping. Americans associate "plug-in's" with toys, and with computers that are tethered to the wall. Folks hear "plug-in" and their paleomammalian brain "thinks" tethered.

Ya gotta do away with "plug-in."

Nah, it just isn't gonna work. You still have the battery issue. I would bet that it is the rare American who has not experienced a dead battery in their "conventional" automobile, and changing a 12-volt battery for $120 is a real pain. Imagine a dead battery in your Volt. A really dead battery. [Or an exploding battery. Unsafe at any speed.]

How many times have you seen children open a Christmas gift only to be disappointed to see that it requires six AA batteries (not included)? That's the image folks have of batteries.

Somehow, Government Motors needs to change the image. It could start by calling them something different than "plug-in's." I wonder if they just called them what they are: coal-powered?

Plug-in = tethered. Plug-in = toy. Or toasters.


From Bloomberg via Carpe Diem.

Or direct to Bloomberg.
As regulators and environmentalists study whether hydraulic fracturing can damage the environment, industry scientists are studying ways to create longer, deeper cracks in the earth to release more oil and natural gas.

Energy companies are focused on boosting production and lowering costs associated with so-called fracking, a technique that uses high-pressure injections of water, sand and chemicals to break apart petroleum-saturated rock. The more thoroughly the rock is cracked, the more oil and gas will flow from each well.

The world’s largest oilfield service providers are leading the search for new technologies, with some companies focused on splintering the rock into a web of tiny fissures, and others seeking to create larger crevices in the richest zones.

“I want to crack the rock across as much of the reservoir as I can,” said David Pursell, a former fracking engineer who’s now an analyst at Tudor Pickering Holt & Co. in Houston. “That’s the Holy Grail.” 
Now if they can just frack without diesel or anything the EPA can classify/define as diesel.

If Newfield thinks fracking is expensive, wait until they "see" super-fracking.

Thirteen (13) New Permits -- Very Much a "Manufacturing" Report -- The Bakken, North Dakota, USA

Posting now.

Daily activity report, January 18, 2012 --

Operators: Marathon (3), Dakota-3 (3), OXY USA (2), Crescent Point, Hess, Hunt, CLR, BEXP

Fields: Murphy Creek, Dimond, Big Butte, Parshall, Alger, Brooklyn Eagle Nest, Willmen.

Crescent Point has a wildcat in Williams -- interesting.

Sixteen (16) wells were reported as "plugged or producing."

Twelve (12) producing wells (on DRL status) reported IPs, including:
  • 20164, 920, Hess, EN-Johnson-155-94-2017H-2, Mountrail
  • 20738, 1,496, Hess, HA-Morgan-152-95-0805H-2, McKenzie
  • 20902, 970, Hess, EN-Weyrauch B-154-93-3031H-2, Mountrail
No wells came off the confidential list.

Two wells were transferred from Marathon to Resolute Natural Resources Company, LLC:
  • 16161, Carmona 31-1H, McKenzie County
  • 16317, Dolezal 24-24H, McKenzie County

Updating Previously Completed Wells That Have Reported IPs -- Just Some Housekeeping -- The Bakken, North Dakota, USA

Some have been updated elsewhere on the blog.

Breaking on CNBC Now -- Administration To Reject Keystone XL 2.0 -- Obama's Job Council Supports It -- Speaks Volumes

Obama's Jobs Council Supports Keystone XL 2.0 -- Obama Rejects It -- Speak Volumes -- Jobs, Obviously Not #1

[Best comment received so far: Candidate Obama talked about energy security. We have the 5th fleet protecting our vulnerable oil supplies from the Persian Gulf while we block pipelines from Canada.]

On CNBC now. Here's the Bloomberg link, time-stamped 11:52 a.m. by Bloomberg. It looks like CNBC was about 30 minutes late with this breaking news.
The rejection will probably come from the State Department which has been charged with reviewing the project and a joint statement will come from some of the larger unions and environmental groups in support of the decision, according to the person who spoke on the condition of anonymity before an announcement.

The administration will let TransCanada submit a new application for an alternate pipeline route (Keystone XL 3.0) said a person familiar with the administration’s plans.
RigZone's take on the rejection.

As noted earlier, Keystone XL 1.0 was rejected; replaced by Keystone XL 2.0.

Talking head now says that "this was expected; not at all unexpected."

Talking head says Keystone XL 5.0 will be approved after the election.

(I added the numerical iterations to keep track of the various projects:
  • Keystone XL 1.0 was the original; rejected by State Dept in late 2011
  • Keystone XL 2.0 was the follow-on to the rejected project; this is the first re-route; it is on Hillary's desk; Congress gave Obama 60 days to decide; it looks like he called their bluff, although he hasn't looked at the plan; Obama rejected 2.0 on January 18, 2012
  • Keystone XL 2.1 will be considered, in the news January 19,2012.
  • Keystone XL 3.0 will be announced after the election, with "final decision" in 2013
  • Keystone XL 3.1 will be the project routing to satisfy Texas' concerns
  • Keystone XL 4.0 will be the project that takes Canadian oil sands oil to the west coast/China)
For those keeping track, Keystone XL 3.0 will be the second re-routed pipeline proposal with a "final" decision in 2013.
“This was not the end of the line for XL. This was, frankly, politics,” he said. “We’re probably going to see TransCanada and the state Nebraska come together in the next, probably, three weeks.”

A final analysis could come in the fall, after which the company would likely reapply for a rerouted pipeline with a final decision in 2013.
There is no relationship between $125/bbl oil, $4.50 gasoline, $5.00 diesel, and the Keystone, but if Obama's opponents can't demagogue this issue, they can't demagogue anything.

"Unions in support of this...." All I can think of is those families whose fathers do not have a job. Sad. Sad. Sad.

Enbridge has been trending higher all day, but is hitting new highs for the day, up over 1 percent now (12:30 p.m. EST).

Confidential List -- The Bakken, North Dakota, USA

1,699 wells on the NDIC confidential list.
  • To be released through end of January, 2012: 73
  • To be released in the month of February, 2012:  129
  • To be released in the month of March, 2012: 158
  • To be released in the month of April, 2012: 159 (record?)
  • To be released in the month of May, 2012: 149
  • To be released in the month of June, 2012: 129
The list does not add up to 1,699 due to number of wells to be released in July and later.

Operating Rigs -- January 18, 2012 -- The Bakken, North Dakota, USA

Baytex: 2
BEXP:  15
BTA: 1
BR: 6
CCS Midstream: 1
Chesapeake: 2
CLR: 18
Corinthian: 1
Cornerstone: 1
Crescent Point: 2
Dakota-3 (WMB): 6
Denbury: 6
ERF: 5
EOG: 7
Eternal Energy: 1
Fidelity: 2
G3 Operating: 2
Gadeco: 1
GMX Resources: 1
Helis: 2
Hess: 14
Hunt: 3
KOG: 5
Liberty Resources: 3
Marathon: 6
Missouri Basin (SWD): 1
Murex: 1
Newfield: 2
North Plains: 1
Oasis: 7
Petro Harvester: 2
Petro-Hunt, LLC: 13 (just under the radar, one of my favorite to watch)
QEP: 2
Samson Resources: 2
Slawson: 7
SM Energy: 3
Triangle: 1
True Oil: 1
Ward-Williston: 1
Whiting: 18
XTO: 6
Zavanna: 3
Zenergy: 3

Futures Fifteen Minutes Before the Open: Up a Buck -- Rambling Over the Bakken, North Dakota, USA

Link here (the link is dynamic and may not reflect earlier data). Where are prices headed in 2012?
Barring any major event out of Iran, Larry expects WTI prices to average between $102 to $106 a barrel this year.  
Goldman Sachs analysts are forecasting an average WTI price of $112.50 a barrel.

Veteran NYMEX oil trader Dan Dicker is expecting an acceleration of WTI prices to $125 in the third quarter after a period of little change in the first two quarters.

Natixis' head of commodities research, Nic Brown, predicts that prices will rise to $115 a barrel in the fourth quarter from $103 a barrel in the first quarter.
The predictions all have one thing in common.

Some random comments (some of this is for investors only; be advised of my disclaimer for this site):

As I skimmed through old posts and read some new comments sent in overnight, one thought: the oil companies in the Bakken are going after the "low-hanging fruit." If accurate, the EURs/section in the Williston Basin are grossly underestimated.

I assume the EURs include enhanced oil recovery technology in the out years. If not ...

The February dockets should be posted soon.

Judge's ruling on the death of six (or was it seven) migratory birds in oil waste pits last spring has ramifications for folks on both sides of the issue. Forbes also reported the story.

The presentations at this site are well-worth having on in the background while surfing the net; conference in San Antonio, TX, earlier this year on developing unconventional oil and gas -- the oil and gas are conventional; the method of extracting the oil/gas from "tight" shale is considered "unconventional." Needed to clear that up.

From Yahoo!In Play (the link is dynamic and will change by tomorrow): Hess announced that it will take a $525 mln after-tax charge against its fourth quarter 2011 earnings as a result of the shutdown of the HOVENSA refinery in St. Croix, U.S. Virgin Islands, a joint venture between Hess and Petroleos de Venezuela S.A. Following the shutdown, the complex will operate as an oil storage terminal. Hess said in a release today that its losses at the refinery have totaled $1.3 bln in the past three years alone and were projected to continue.

Today's talking head on oil and gas acquisition targets: Triangle Petroleum, KOG, NOG, and Oasis. The interesting thing about this story is that the headline did not mention the Bakken -- the headline suggested takeover targets among ALL oil and gas companies. The only ones that made the list were ... drum roll ... in the Bakken. 

Bloomberg quotes Lynn Helms: North Dakota needs more fracking crews. None of these articles ever talk about the huge amount of cash flow that is being lost for two quarters, maybe three quarters, while operators are waiting for wells to be fracked. On the other hand, could there be reasons we are not thinking about that explains the "seeming" lack of fracking spreads. Some explanations are counter-intuitive.

For folks who like Enbridge, and I do, having accumulated shares in ENB for years, link here. This is an unusual assortment of companies that the writer feels will benefit from public works jobs worldwide. The list is topped by Enbridge. I am not familiar with the other companies: Hutchison Whampoa, Cemig, ABB, Abertus Infraestructure (sic). I haven't paid attn to ENB for the past several months; looking at the last six month price action, interesting. 3% yield. EEP is just as interesting and pays 6%.

Factory output soared in December.

The world is profoundly underinvested in US stocks. Two comments, the first of which may or may not have been suggested in this story (I don't read these throw-away stories very closely). First, years ago, it was in 1980, to be exact, I thought about supply and demand of individual shares of US stock. There was a story on this issue yesterday but I don't have the link and won't look for it. Not worth the time. Second, near the end of the linked article:
Disagreeing with all but the most recent of Breakout! views, Saut says that a strong U.S. dollar is bullish for stocks, "provided it's not too strong." Too strong is relative in currencies. By implication and assertion, Saut's notion that Europe can fake it 'til they make it will keep the Euro from going to something resembling zero --the fake currency's intrinsic value.
I point this out because of the reader who sent me a note a couple days ago telling me that the reason for manufacturers coming back to the states was due to a weak dollar. I talked about that yesterday; this is just more of the same. 

Iofina: Another Company To Enter The Bakken?

Link here.

Based on one anonymous comment, but maybe others know more.

Day Old News, But For Those Who Missed It: Oil Companies Not Liable for Migratory Bird Deaths -- Judge -- The Bakken, North Dakota, USA

Link here to Grand Forks Herald:
A federal judge ruled Tuesday that oil companies cannot be prosecuted for the deaths of a half-dozen ducks in waste disposal pits, saying prosecutors went too far in applying a law meant to protect migratory birds.

The deaths of the birds, which mistook the pits for water ponds and were covered in oil waste, were an "incidental or unintended effect" of oil production and could not be compared to hunting or poaching, U.S. District Judge Daniel Hovland ruled.
The story line not told: this clears the way judicially for wind turbines to kill whooping cranes.